Contingency planning

How prepared is your business? Are
you confident that operations will
continue if you are unexpectedly absent? Can your business resume its operations quickly after severe weather or
other emergencies strike?

Being prepared means having a plan that
addresses any business scenario outside
“business as usual.”

“There are too many situations,” says
Liana Martino, senior vice president at
SunTrust Bank, “where business owners
don’t prepare a comprehensive post-disaster contingency plan or give no thought to
what would happen to the business if
something happens to him or her. A good
contingency plan can help mitigate losses
and keep a business operating.”

Smart Business talked with Martino
about some of the things business owners
should consider as they develop contingency plans.

What are some of the reasons a business
owner should develop a contingency plan?

We never know what might happen to us.
It can be a fatal or incapacitating accident,
weather emergencies, fires, vandalism, terrorist attacks. It can be anything that interrupts the normal course of business.

Proper planning will enable your organization to resume business quickly, either
by rerouting operations or implementing
work-around solutions. These back-up procedures and systems reduce business
interruption and associated costs, improve
client retention, and can help ease emergency-related hardships for employees.

How do you start the process of setting up a
contingency plan?

First, consider and list every possible
worst-case scenario that you can imagine.
Determine who would be affected by each
of those cases and how they would be
affected. Now, what do they need to know
to continue the business?

Also consider emergencies such as fires
that might affect the business while you’re
the one that needs to keep things going.
Where is information stored? Are there off-site backups? Is there a predetermined
command post where key leadership can
gather if the office is uninhabitable?

What are some of the things that should be
included in your contingency plan?

Develop a playbook outlining action in
the various what-if situations. Who is
responsible for what? Who is contacted for
what information? List names and contact
information for all key people, inside and
outside the organization. This list should
include accountant, attorney, insurance
agent, banker, key contacts at major suppliers and customers, family members and
key employees.

The plan should include who has various
bits of information. Who has which passwords to get into your systems? Who has
authority over what situations? Where are
various bits of office information located?
Information on insurance policies and
credit lines also should be included.

Once the playbook is compiled, who should
receive copies?

Everyone that has a stake in the ongoing business and will be in a position to
make decisions about what to do next should have a copy. Because of the sensitivity of the information, take care in
deciding who is involved and what information is included. For example, don’t
list passwords for your computers, but do
identify who has them and who can
change them.

Involve all of those people who will
receive a copy of the plan in the process of
developing it. If you have separate insurance agents for the business and personal
coverage, they should both be involved.
The same holds for attorneys, accountants
and bankers.

What other things should be considered as
you develop your plan?

Is your insurance up to date? Are all
contingencies adequately covered? Do
you have a buy-sell agreement with partners? Do you have insurance to cover
that? If you are the sole owner, do you
have any key employees who could continue the business? You may want to give
them some stock in the company so they
have a vested interest. If your spouse is
part of the business, how might that
affect the other partners or owners? If
your spouse is not involved, how will she
or he be compensated for your share of
the business?

How will payroll and other expenses be
covered until cash flow starts again or
insurance payments are made? Do you
have a line of credit established that hasn’t
already been expended?

Talk about all of these things now while
you are able to be involved in the decisions and stage dress rehearsals. Beyond
what is discussed above, your insurance
agent, attorney, banker or accountant can
supply you with forms that will help you
get started.

LIANA MARTINO is senior vice president and Business
Banking Line of Business manager for SunTrust Bank. Reach her
at (813) 224-2254 or [email protected].

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